Analysing the Evolving Face of Indian Real Estate Market

The Indian real estate market has been steadily
evolving. This is particularly true in the category of affordable homes
targeted towards the ‘Great Indian Middle Class’. The aim of this article is to
analyse the evolving phase of the Indian Real Estate Market.

The top 8 cities
of India showed a record 320% jump on a year-on-year basis in the category of
providing affordable homes to the middle class. This has been a conscious but
focused strategy by Indian builders to counter the slump in the economy. Here’s
an in-depth analysis of the changing real estate market of India:

The Growth of Affordable Homes

Existing market
trends are demonstrating that 2015 will be nothing less than a landmark year
for the recovery and growth of affordable housing units. Pricing has always
remained a vital factor in Indian real estate and an increase in affordable
residential units will result in higher levels of absorption.

The residential
property market, can be divided into the luxury segment, mid-level priced
houses and affordable housing units. An increased demand for low cost
properties is likely to put the pressure on the luxury housing segment, but it
would not be that significant. In the current year, builders are set to focus
on clearing backlogs, meeting construction deadlines, and working towards
recovery of inventory.

1.About 7000 affordable housing units have
been launched by the developers in the current quarter as opposed to a figure
of 1,670 the previous year. Out of these numbers, approximately
60% of such affordable homes were constructed in the National Capital Region
alone.

2.The government has laid a very strong
emphasis in the category of affordable housing units. Due to the rapid increase
in the number of Indian middle class families, there has been a huge surge in
demand for affordable housing units throughout the country.

3.The government of Haryana has come out with an
affordable housing policy which has led to a large volume of low-cost projects
in Gurgaon. The Delhi Development Authority has also come up with an attractive
housing scheme that has received a positive response from a large number of
home-seekers.

As you can see,
there is a considerable increase in the demand for affordable housing units
which most builders are capitalising on right now. Real estate markets in
Sohna, Yamuna-Expressway, and Noida Extension are the new preferred housing
destinations in Delhi-NCR. In June 2015 itself, 4 new projects in the price
range of Rs. 30 Lakhs to 50 Lakhs were launched in Noida Extension and Sohna.

Though the
Reserve Bank of India has slashed interest rates thrice in the current year,
banks have not been forthcoming in passing the benefits to their customers. A
study conducted by Knight Frank India and FICCI showed that for the very first
time, the number stakeholders in the real estate sector shifted to a negative
zone since the new government came to power in 2014. It should also be noted
that there was a decline of about 14% in the figures of newly launched housing
projects in the first half of 2015.

Final Word

The increase in
the number of affordable housing projects indicates that there has been a
consistent effort to align demand with supply. However there is a big backlog
and it’s imperative that authorities cut down the time taken for getting
relevant approvals and completing the construction of such projects.

The government
has an important role of expediting this process. The central and state
governments should explore Public-Private Partnerships to develop and provide
affordable living spaces to the public. This can be also lead to a lot of
savings for many people looking to invest in their first home.